Transfer Pricing And The Pharmaceutical Industry: The Lessons From 2007

Transfer pricing involves the price that one member of a multinational firm charges another for goods, services and intangible assets transferred between related parties. The central theme in transfer pricing is to ensure that the prices at which these goods, services and intangible assets are transferred represent arm's length standards.

Several factors are changing the way we look at transfer pricing in the pharmaceutical industry, from both domestic and international perspectives, and how we determine these intercompany prices. The rise of generic drug companies, current regulatory issues relating to patent protection and, more recently, the 2006 congressional mid-term elections in the U.S., are altering the risks faced by pharmaceutical companies and the regulatory environment in which they operate.